Correlation Between Dreyfus Government and Goldman Sachs
Can any of the company-specific risk be diversified away by investing in both Dreyfus Government and Goldman Sachs at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Dreyfus Government and Goldman Sachs into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Dreyfus Government Cash and Goldman Sachs Technology, you can compare the effects of market volatilities on Dreyfus Government and Goldman Sachs and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Dreyfus Government with a short position of Goldman Sachs. Check out your portfolio center. Please also check ongoing floating volatility patterns of Dreyfus Government and Goldman Sachs.
Diversification Opportunities for Dreyfus Government and Goldman Sachs
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Dreyfus and Goldman is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Dreyfus Government Cash and Goldman Sachs Technology in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Goldman Sachs Technology and Dreyfus Government is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Dreyfus Government Cash are associated (or correlated) with Goldman Sachs. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Goldman Sachs Technology has no effect on the direction of Dreyfus Government i.e., Dreyfus Government and Goldman Sachs go up and down completely randomly.
Pair Corralation between Dreyfus Government and Goldman Sachs
Assuming the 90 days horizon Dreyfus Government is expected to generate 14.97 times less return on investment than Goldman Sachs. But when comparing it to its historical volatility, Dreyfus Government Cash is 8.43 times less risky than Goldman Sachs. It trades about 0.13 of its potential returns per unit of risk. Goldman Sachs Technology is currently generating about 0.22 of returns per unit of risk over similar time horizon. If you would invest 3,202 in Goldman Sachs Technology on September 12, 2024 and sell it today you would earn a total of 501.00 from holding Goldman Sachs Technology or generate 15.65% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 98.44% |
| Values | Daily Returns |
Dreyfus Government Cash vs. Goldman Sachs Technology
Performance |
| Timeline |
| Dreyfus Government Cash |
| Goldman Sachs Technology |
Dreyfus Government and Goldman Sachs Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Dreyfus Government and Goldman Sachs
The main advantage of trading using opposite Dreyfus Government and Goldman Sachs positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Dreyfus Government position performs unexpectedly, Goldman Sachs can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Goldman Sachs will offset losses from the drop in Goldman Sachs' long position.| Dreyfus Government vs. Artisan High Income | Dreyfus Government vs. Blrc Sgy Mnp | Dreyfus Government vs. Western Asset Municipal | Dreyfus Government vs. Multisector Bond Sma |
| Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. Ambrus Core Bond | Goldman Sachs vs. T Rowe Price | Goldman Sachs vs. Blrc Sgy Mnp |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.
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